If You Had Bought Sopharma Trading AD's (BUL:SO5) Shares Three Years Ago You Would Be Down 27%

As an investor its worth striving to ensure your overall portfolio beats the market average. But in any portfolio, there are likely to be some stocks that fall short of that benchmark. We regret to report that long term Sopharma Trading AD (BUL:SO5) shareholders have had that experience, with the share price dropping 27% in three years, versus a market return of about 17%. There was little comfort for shareholders in the last week as the price declined a further 2.7%.

View our latest analysis for Sopharma Trading AD

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Sopharma Trading AD saw its EPS decline at a compound rate of 0.8% per year, over the last three years. The share price decline of 10% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Sopharma Trading AD's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Sopharma Trading AD's TSR of was a loss of 16% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

It's good to see that Sopharma Trading AD has rewarded shareholders with a total shareholder return of 1.8% in the last twelve months. However, the TSR over five years, coming in at 6% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand Sopharma Trading AD better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Sopharma Trading AD , and understanding them should be part of your investment process.

We will like Sopharma Trading AD better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on BG exchanges.

If you’re looking to trade Sopharma Trading AD, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.